Oil steady on Libya disruptions, bloated U.S. stockpiles

The EIA reported that crude inventories rose only 867,000 barrels last week, and it is said the market gains were also triggered by the agency disclosing that USA crude exports almost doubled last week to climb over 1 million barrels per day (bpd); crude exports for 2016 climbed 12 percent to 520,000 bpd, with China becoming the third-biggest overseas buyer. Gasoline stocks tumbled 3.7 million barrels compared with expectations for a 1.9 million barrels slip.

The latest is that the oil sheiks are looking to extend that agreement despite a loss of market share as USA producers ramp up in response to the recent recovery in oil prices. The market is positioning for a possible reversal in the incessant swell in U.S. crude stocks seen since the start of this year, as United States refineries ratchet up in the second quarter from their multi-year low operating rates.

Analysts said the rise was only half of the build expected and that it was a sign of tightening USA crude supplies.

Earlier reports said as of March 25 Russian Federation reduced oil production by 185,000 barrels per day under the agreement with OPEC.

Prices for front-month Brent crude futures, the Global benchmark for oil, were at $52.31 per barrel at 0151 GMT, down 11 cents from their last close.

Growing expectations that the Organization of the Petroleum Exporting Countries will agree to extend its production-cut agreement also contributed to oil's price climb. Increasing demand should help chip away at high levels of crude inventories, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc.

Meanwhile, UAE's Oil Minister Suhail Al-Mazrouei said that the current glut is a result of seasonal factors in the US: it is refinery maintenance season and crude oil stockpiles are increasing.

"Yet, it is becoming more clear that the events of recent weeks will make it much harder for Libya to be a reliable supplier and get production back to levels they had" before the fall of dictator Moammar Gadhafi, said Flynn.

OPEC, along with other producers including Russian Federation, aims to cut output by nearly 1.8 million bpd during the first half of the year.

The Libyan supply disruption is thought to be around 500,000 barrels of oil per day, Seaport Global Securities analysts wrote in a Wednesday morning note. Our base case assumption includes an extension of the OPEC cuts beyond June 30, albeit with weaker compliance in H2 2017.

The US Energy Information Administration (EIA) is due to publish official US crude and fuel product data on Wednesday.

Along with the OPEC members, multiple non-OPEC oil exporting countries including Russian Federation also pledged to reduce their output.

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